In Re Bonacina Le Brasseur v Bonacina - Thomson Reuters

[1912] 2 Ch. 394 Page 11912 WL 17417 (CA)(Cite as: [1912] 2 Ch. 394)followed.*394 In Re BonacinaLe Brasseur v. BonacinaCourt of AppealCACozens-Hardy M.R., Farwell and Kennedy L.JJ.1912 June 26, 27; July 2Administration--Debt--Bankruptcy of Debtor--Discharge--Statutory Release-- SubsequentAcknowledgment of Debt--Foreign Document--New Contract after Discharge--Consideration--Proceeding "in respect of a debt"--Bankruptcy Act,1883 (46 & 47 Vict. c. 52), s. 30, sub-s. 3.An Italian subject trading in England becamebankrupt in 1897, and obtained his discharge in1901. At the date of his bankruptcy he wasindebted to a creditor, also an Italian subject, butthis debt was not disclosed in the bankruptcyproceedings, of which the creditor was unaware. In1906 the debtor signed a document (privatascrittura) in Italian form, whereby heacknowledged to the creditor the amount of thedebt and undertook to pay it off within five yearswith interest. In March, 1908, the debtor died, andin an action to administer his estate in this countrythe creditor claimed to prove for the amount of thedebt. According to Italian law no consideration wasnecessary to support a promise to pay the old debt,there being a moral obligation to pay which, by theexecution of the privata scrittura, was convertedinto a valid legal obligation. It was held by Eve J.(ante, p. 68) that, assuming judgment could berecovered upon the document in Italy, the claimcould not be enforced in England, since it was "aproceeding in respect of a debt" within s. 30, sub-s.3, of the Bankruptcy Act, 1883, from which thedebtor had obtained a statutory release by hisdischarge:--Held, by the Court of Appeal, that the documentof 1906 constituted a new and enforceable contractentered into after the discharge, and that the claimwas not therefore barred by the provisions of s. 30,sub-s. 3.Decision of Eve J., ante, p. 68, reversed.Jakeman v. Cook (1878) 4 Ex. D. 26, and In reAylmer (1893) 1 Manson, 391; 70 L. T. 244,Kidson v. Turner (1858) 3 H. & N. 581, andHeather & Son v. Webb(1876) 2 C. P. D. 1,distinguished.THIS was an appeal from a decision of Eve J.,reported ante, p. 68.On August 30, 1897, Lodovico Carlo Bonacina,an Italian subject long resident in England, wasadjudicated a bankrupt, and on August 10, 1901, heobtained his discharge. At the commencement ofthe bankruptcy he was indebted to the appellant,Giacomo Mina, of Monza, in the kingdom of Italy,for advances in the sum of 1350l., carrying interestoriginally at 5 per cent., and later at 4 per cent., buthe never disclosed this indebtedness *395 in thebankruptcy proceedings, nor did the creditor knowof those proceedings, until after the death ofBonacina, which occurred on March 31, 1908.During the years 1902 and 1904 Bonacina madevarious payments, amounting to about 250l., to thecreditor on account of the debt.On October 15, 1906, Bonacina signed in Italy anItalian document, the terms of which are set out inthe report in the Court below [FN1], whereby heacknowledged to Mina his then indebtedness,which represented the balance of the debt owing atthe commencement of the bankruptcy andsubsequent interest, at the sum of 43,959 Italianlire, equivalent to about 1750l., and agreed to payoff the debt by instalments or otherwise within fiveyears from January 1, 1907, and in the meantime topay interest on the unpaid part at 4 per cent. perannum from the last-mentioned date.FN1 Ante, p. 68.This document, which was called "privatascrittura," was by its terms deemed to be a publicinstrument. It appeared from the evidence of Italianadvocates that according to the law of Italy theEnglish doctrine of consideration being necessaryto support a contract had no application, and furtherthat the effect of the execution of the "privatascrittura" after the discharge in bankruptcy was totransform the moral obligation to pay the debt,which existed under Italian law, into a legalobligation valid and enforceable in Italy.In an action to administer Bonacina's estate in thiscountry a claim was brought in by Mina as acreditor for 1758l. 7s. 6d. and interest. Upon asummons to allow the claim as a debt provableagainst the testator's estate, Eve J. held that theCopr. © West 2004 No Claim to Orig. Govt. Works

[1912] 2 Ch. 394 Page 21912 WL 17417 (CA)(Cite as: [1912] 2 Ch. 394)document of October 15, 1906, gave rise to nocause of action according to English law, being avoluntary promise to pay for which there was noconsideration; and, further, that, even assuming thatjudgment could be recovered in Italy upon thedocument, it could not be enforced in England,since the claim was "a proceeding in respect of adebt" from which the debtor had obtained astatutory release by his discharge, and s. 30, sub-s.3, of the Bankruptcy Act, 1883, applied.From that decision the creditor appealed.*396 Maugham (Clayton, K.C., with him), for theappellant. The appellant's claim is to prove for adebt under a new contract entered into after adischarge in bankruptcy. The contract would not bebinding if it were an English contract, becausethere was no consideration, but it is an Italiancontract to be construed according to Italian law,and the evidence of Italian jurists is clear that aftera discharge in bankruptcy there remains a moralobligation to pay the debt, and that the execution ofa document called a "privata scrittura" which wasexecuted by the debtor in this case converts themoral obligation into a legal one and so gives anew cause of action. If the contract is an Italiancontract, binding in Italian law, it can be enforcedhere: Dicey on the Conflict of Laws, 2nd ed., r.151, pp. 545, 549.[KENNEDY L.J. Is not the case determined bythe lex fori? It has been held that the EnglishCourts would not enforce a foreign contract whichthe Statute of Frauds would make invalid here.]That was decided in Leroux v. Brown [FN2], butas a question of evidence, and so of proceduregoverned by the lex fori. Dicey says that a Scotchcontract, good in Scotland, but bad in England forwant of consideration, may be enforced. Saxby v.Fulton [FN3]and similar cases as to gambling arein my favour. Moreover the contract was to pay byinstalments in five years; in effect it amounted togiving the debtor time.FN2 (1852) 12 C. B. 801.FN3 [1909] 2 K. B. 208, 219.P. O. Lawrence, K.C., and H. F. F. Greenland, forthe executor of the debtor. This claim is aproceeding "in respect of a debt" within s. 30, subs.3, of the Bankruptcy Act, 1883, and that sectionis a complete answer to the claim: see Kidson v.Turner [FN4], a decision under a similar clause inthe Act of 1849. Heather & Son v. Webb [FN5]shews that the fact that the creditor did not know ofthe bankruptcy makes no difference. A discharge inan English bankruptcy is a good dischargeeverywhere. The evidence as to the continuance ofa moral obligation in Italian law only applies to acomposition with creditors under the Italian law; itis not directed to an English discharge.FN4 3 H. & N. 581.FN5 2 C. P. D. 1.Under the old law, where there was a legal rightthe remedy *397 for which was barred, though theright continued to exist, as in the case of debts theremedy for which was barred by bankruptcy, themoral obligation arising from such existing rightformed a sufficient consideration to support apromise, and so the debt might be revived by asubsequent promise of the debtor to pay it: Hawkesv. Saunders [FN6]; Trueman v. Fenton. [FN7]FN6 (1775) 1 Cowp. 289, 290.FN7 (1777) 2 Cowp. 544.By the Act 6 Geo. 4, c. 16, s. 131, it was enactedthat no such promise to pay could be sued uponunless it was in writing.By the Insolvent Debtors Act, 1826 (7 Geo. 4, c.57), s. 61, it was provided that after discharge noexecution should issue against an insolvent debtorfor debts to which the adjudication extended, and toany action for such debts the discharge could bepleaded generally. In Evans v. Williams [FN8], acase under that Act, Lord Lyndhurst held that anew contract to secure the old debt was bad,although additional consideration was thrown in.FN8 (1832) 1 Cr. & M. 30.By the Bankruptcy Act, 1849 (12 & 13 Vict. c.106), s. 204, a great change was effected. Thatsection enacted that no bankrupt should be liable topay any debt from which he should have beendischarged by virtue of his certificate, upon anycontract, promise, or agreement made after thefiling of the petition for adjudication; and inKidson v. Turner [FN9] it was held that the sectionCopr. © West 2004 No Claim to Orig. Govt. Works

[1912] 2 Ch. 394 Page 31912 WL 17417 (CA)(Cite as: [1912] 2 Ch. 394)applied not only to a contract, promise, oragreement requiring a consideration to support it,but to contracts under seal.FN9 3 H. & N. 581.By the Bankruptcy Act, 1861 (24 & 25 Vict. c.134), s. 164, a promise to pay a debt barred by thecertificate of discharge was made void.Under that Act it was decided in Rimini v. VanPraagh [FN10]that a bill of exchange given by thedebtor to a creditor, who was barred by acomposition deed, for his old debt was void.FN10 (1872) L. R. 8 Q. B. 1.By the Act 32 & 33 Vict. c. 83, s. 20, the Act of1861 was repealed, and by the Bankruptcy Act,1869 (32 & 33 Vict. c. 71), s. 49, the law was madevery much what it is in this respect under theBankruptcy Act, 1883, s. 30.*398 We rely upon Heather & Son v. Webb[FN11], where a promise to pay a debt barred bythe bankruptcy, which could only be supported bythe moral obligation which existed under the oldlaw, was held bad. Jakeman v. Cook [FN12], whichwas relied upon by the applicant in the Courtbelow, is only reconcilable with the decisions onthe ground that there was altogether a new debt.FN11 2 C. P. D. 1.FN12 4 Ex. D. 26.[KENNEDY L.J. That case was approved by LordSelborne in Ex parte Barrow. [FN13]]FN13 (1881) 18 Ch. D. 464, 470.Here there was no intention to make a newcontract. The document of 1906 was merely awritten acknowledgment of the amount of anexisting debt.[KENNEDY L.J. referred to In re Aylmer.[FN14]]FN14 1 Manson, 391; 70 L. T. 244.The claim here is simply a proceeding in respectof a debt which has been discharged, and thedefence pleaded is clearly a matter of procedurewhich is governed by the lex fori. It does not go tothe validity of the contract at all: Dicey on theConflict of Laws, 2nd ed., r. 148, pp. 532, 533, andpp. 708- 710; Leroux v. Brown [FN15]; Huber v.Steiner [FN16]; Blackburn Corporation v.Sanderson [FN17]; Moulis v. Owen [FN18];Quarrier v. Colston [FN19]; Robinson v. Bland.[FN20]FN15 12 C. B. 801.FN16 (1835) 2 Bing. N. C. 202.FN17 [1902] 1 K. B. 794, 807.FN18 [1907] 1 K. B. 746, 753.FN19 (1842) 1 Ph. 147.FN20 (1760) 2 Burr. 1077.The question whether there was a good contractenforceable in Italy depends upon the evidence ofthe Italian experts. That goes to shew that after arelease in proceedings for liquidation byarrangement the debtor remains morally bound topay his debts, and that the moral obligation may bea consideration for a written promise to pay. But bethat as it may, no enforceable debt has been provedagainst the testator's estate.Clayton, K.C., in reply. The appellant relies upona new contract executed in Italy after the dischargein bankruptcy. It is true that that contract if enteredinto in England would not be enforceable, becauseit would be nudum pactum, but it would not bebarred by the bankruptcy, because the statutory*399 release does not apply to a contract enteredinto after the receiving order. It is only debtsprovable in the bankruptcy which are released, anda contract made after the receiving order cannot bethe foundation of a debt provable in thebankruptcy.Kidson v. Turner [FN21] did apply to a contractmade after the bankruptcy, but that was decided onCopr. © West 2004 No Claim to Orig. Govt. Works

[1912] 2 Ch. 394 Page 41912 WL 17417 (CA)(Cite as: [1912] 2 Ch. 394)the special provisions of the Act of 1849, which arevery different to s. 30, sub-s. 3, of the Act of 1883.There was a new contract here enforceableaccording to Italian law. It was made in Italy inItalian form and language, both the parties to itwere Italians, and it was intended to be performedin Italy. It is not contrary to public morals or publicpolicy and will therefore be enforced in thiscountry.FN21 3 H. & N. 581.has no application, and further that the moralobligation to pay the debt is sufficient to found alegal obligation if a document such as the "privatascrittura" has been executed. It seems to me,therefore, that the claimant is in precisely the sameposition in this country as he would have been ifthere had been an English contract of the same datewith a new and valuable consideration. In short, theclaimant relies upon a new and enforceablecontract entered into after the discharge andtherefore not in any way subject to the provisionsof s. 30, sub-s. 3.Cur. adv. vult.FN22 4 Ex. D. 26.July 2. COZENS-HARDY M.R.This is an appeal from a decision of Eve J., whohas disallowed a claim in an administration action.The testator and the claimant were both Italians.The testator, who was resident in England, wasadjudicated bankrupt in 1897 and obtained hisdischarge in 1901. The claimant had made variousadvances to the testator prior to the discharge. Noproof was made by the claimant in the bankruptcy,for the best possible reason, that he was not awareof the bankruptcy. On October 15, 1906, adocument was executed in Italy by which thetestator acknowledged his debt to the claimant asbeing 43,959 lire, which sum he undertook to paywithin five years with interest. This document,which is called "privata scrittura," was to bedeemed to be a public instrument. It was contendedon behalf of the executor that by virtue of s. 30,sub-s. 3, of the Bankruptcy Act, 1883, noproceedings could be taken in England in respect ofthis debt, and Eve J. has assented to this view.It is important to observe that the order ofdischarge only released the bankrupt from debtsprovable in bankruptcy and that sub-s. 3 has nooperation except in respect of a debt from whichthe bankrupt was released by the order ofdischarge: as to which see s. 37, sub-s. 3. It hasbeen held by a Divisional Court in Jakeman v.Cook [FN22], and by Vaughan Williams J. *400 inIn re Aylmer [FN23], that a promise after dischargeto pay a debt barred by the discharge is perfectlygood if supported by a new and valuableconsideration. If therefore in 1906 an Englishcontract for value had been executed, I think theproof must plainly have been admitted. But the"privata scrittura" is a document subject to Italianlaw, and the evidence adduced by Italian lawyersseems to me to have established that according tothe law of Italy the English doctrine ofconsideration being necessary to support a contractFN23 1 Manson, 391; 70 L. T. 244.I was for some time pressed by the decision inKidson v. Turner [FN24], but that case reallyturned upon the language of s. 204 of theBankruptcy Act, 1849, which differs materiallyfrom s. 30 of the present Act. The words there werethat no bankrupt after his certificate should beliable to pay any debt from which he will havebeen discharged by virtue of his certificate "uponany contract, promise, or agreement made after theissuing of the fiat or filing of the petition foradjudication," and it was there held that a bondgiven by a bankrupt in consideration of a debt fromwhich he had been discharged was, within themeaning of that section, a contract or agreementafter the issuing of the fiat or filing of the petitionfor adjudication. It seems to me that that case isreally no authority upon the present case. Nor do Ithink that the decision of the Divisional Court inHeather & Son v. Webb [FN25] has anyapplication. In that case there was a contractwithout any consideration to pay a debt barred bythe bankruptcy. In the present case there is a validenforceable new contract subsequent to thedischarge.FN24 3 H. & N. 581 *401 .FN25 2 C. P. D. 1.In the view which I take, it is not necessary toconsider many of the interesting and importantquestions discussed by Mr. Lawrence in his ableargument. For these reasons I think that thedecision of Eve J. must be reversed, and the claimmust be allowed and the Master's certificate variedaccordingly.Copr. © West 2004 No Claim to Orig. Govt. Works

[1912] 2 Ch. 394 Page 51912 WL 17417 (CA)(Cite as: [1912] 2 Ch. 394)FN28 4 Ex. D. 26.FARWELL L.J.I am of the same opinion. If an action werebrought here on the agreement of October 15,1906, as on a stated account it would fail, for theitems on which the stated account is founded wouldat once disclose the want of any consideration tosupport it. The moral duty which in LordMansfield's time sufficed is no longer available,because the Act of 1883 releases the bankrupt fromall debts provable in bankruptcy and enables him toplead his discharge as a bar to any proceedings "inrespect of any debt from which he is released bythe order." The necessity of going back to the olddebt as a consideration brings the action within thewords "in respect of," &c. The term "cause ofaction" includes cases where so much of the causeof action as constitutes the consideration for thepromise has occurred before the discharge: perLindley J. in Heather & Son v. Webb. [FN26] Butwhile the Act destroys the consideration formerlyavailable, it does not make it illegal, still lessimmoral, to pay, or agree to pay, the released debt.If therefore the bankrupt after discharge enters intoa new contract for valuable consideration he maybind himself to pay the amount of the old debt.Honourable men pay their just debts if they can,whether protected by a release in bankruptcy ornot, just as honourable men pay bets fairly lostalthough irrecoverable at law. The distinctionbetween a contract which is merely void and onewhich is immoral is well settled. The first is a merenullity, innocuous for good or ill. The latter taintsand destroys the whole of the new contract, as Ihave tried to explain in Hyams v. Stuart King.[FN27] If therefore a bankrupt who has got hisdischarge wishes to deal with his former tradesmenand finds that they refuse to supply him at ordinaryprices unless and until he pays or secures thebalance of their debts proved in the bankruptcy, itis competent to them to enter into a valid *402contract to secure their object: Jakeman v. Cook[FN28] and In re Aylmer. [FN29] All that isrequisite to such a bargain is that it should be madeafter discharge bona fide for value. Whether theseal on a bond would be sufficient consideration Iwill not stay to consider. The case of Kidson v.Turner [FN30] can be dealt with when it arises.FN26 2 C. P. D. 9.FN27 [1908] 2 K. B. 696, 726, 727.FN29 1 Manson, 391; 70 L. T. 244.FN30 3 H. & N. 581.Now in the present case the new contract,although made long after discharge, has in Englishlaw no consideration to support it: but it is anItalian contract made in Italy between Italians andis governed by Italian law, and the expert evidenceconvinces me that it is a contract valid andenforceable in Italy. If so, the only bar to itsvalidity here disappears. No question of procedurearises; a contract which is void (not being immoral)here may be perfectly good in a foreign country,and, if so, can be enforced here, unless there issome rule of procedure that forbids the action: seeMoulis v. Owen. [FN31] But there is no such ruleunless the discharge can be effectually pleaded as arelease: and it cannot be so pleaded, because thecontract is subsequent to the discharge, and thequestion of consideration goes, not to theprocedure, but to the validity of the contract, andthat is a matter of foreign law.FN31 [1907] 1 K. B. 746.KENNEDY L.J.It appears to me, after considering the excellentarguments of the learned counsel on both sides, thatour decision in this case must depend upon thecharacter and effect of the "privata scrittura" as alegal document according to the law of Italy. If theclaim put forward by the appellant ought to beregarded simply as a claim to obtain the payment ofa debt which under s. 37 of the Bankruptcy Act,1883, constituted a debt provable in the bankruptcyof the debtor, and therefore a debt from whichunder s. 30, sub-s. 2, the debtor was released by hisorder of discharge, it is clear that s. 30, sub-s. 3,enables the respondent, the debtor's executor, tomake a successful defence to the claim, and that thejudgment of Eve J., disallowing the claim, isperfectly correct. The objection to the maintenanceof *403 such a claim which is created by s. 30, subs.3, is a matter of legal procedure, and in all suchmatters the lex fori prevails. But--and it is here thatI feel myself obliged to part company from thelearned judge in the Court below--ought theappellant's claim to be treated simply as a claim inrespect of a debt which was provable in thebankruptcy of the deceased debtor? It appears toCopr. © West 2004 No Claim to Orig. Govt. Works

[1912] 2 Ch. 394 Page 61912 WL 17417 (CA)(Cite as: [1912] 2 Ch. 394)me that it ought not. The learned judge has treatedthe "privata scrittura" as a document whichdeserves as little consideration from the Court asthe debtor's promise to pay received from the Courtof Common Pleas in the decision of Heather & Sonv. Webb [FN32], the principle of which he holds togovern the present case. I am unable to concur inthis view. The effect of the "privata scrittura" as alegal obligation must be determined by the law ofItaly; and, as I understand the evidence adduced inregard to that law, this "privata scrittura" created inand by itself as against Bonacina a valid and legallyenforceable obligation from the time of itssignature by Bonacina on October 15, 1906, fiveyears, I think, after he had obtained his discharge inthe English bankruptcy, of which, until afterBonacina's death, the appellant knew nothing. InHeather & Son v. Webb [FN33] the claim of theplaintiff was in respect of an old debt provable inthe defendant's bankruptcy, and the mere promiseof the debtor to pay, notwithstanding his previousdischarge in bankruptcy, inasmuch as there was noconsideration for the promise, could not create anynew obligation according to the law of England. Ifthere had been a valuable consideration for thepromise, the judgment of the Court, as is shewn bythe later case of Jakeman v. Cook [FN34], wouldhave been different.FN32 2 C. P. D. 1.agreement between creditor and debtor in Jakemanv. Cook [FN37]; and being such, as it appears tome, the claim of the appellant cannot rightly betreated as a claim in respect of a debt provable inthe bankruptcy of Bonacina according to theBankruptcy Act, 1883 This appeal, therefore,should be allowed.FN35 4 Ex. D. 26.FN36 1 Manson, 391; 70 L. T. 244.FN37 4 Ex. D. 26.RepresentationSolicitors: White & Leonard; Le Brasseur &Oakley.(G. A. S.)(c) Incorporated Council of Law Reporting ForEngland & WalesEND OF DOCUMENTFN33 2 C. P. D. 1.FN34 4 Ex. D. 26.The doctrine of consideration as it exists with usis peculiar to our common law; it is not to be foundin the law of Italy or, so far as I am aware, in thelaw of other Continental countries which derive theprinciples of their jurisprudence in regard tocontractual obligations from the Roman source.The "privata scrittura" in the present case, beingbased upon the moral obligation to pay a just debt,created, according to Italian law, as new *404 andvalid a legal obligation as the contract of a debtorfor good consideration to pay a debt from whichthe debtor had been released by a discharge inbankruptcy was held by the Court of Exchequer tohave created in the case of Jakeman v. Cook.[FN35]See also the judgment of Vaughan WilliamsJ. in In re Aylmer. [FN36] The interpretation andthe obligation of the "privata scrittura" are, as EveJ. stated in his judgment governed by the law ofItaly--the proper law of the contract; but, if this beso, the claim to which it gave rise was a new claimas new as the claim created by the post-bankruptcyCopr. © West 2004 No Claim to Orig. Govt. Works

(1876-77) L.R. 2 C.P.D. 1 Page 11876 WL 18594 (CPD), (1876) 25 W.R. 253(Cite as: (1876-77) LR 2 C.P.D. 1)*1 Heather & Son v. WebbDivisional CourtDCLord Coleridge, C.J., and Lindley, J.1876 Nov. 16Bankruptcy--Liquidation by Arrangement--Absence of Notice of Proceedings to Creditors--Subsequent Promise to pay Debt barred byBankruptcy--32 & 33 Vict. c. 71, ss. 49, 127.To a statement of defence, setting up that thedefendant was discharged from the claim by anorder of discharge obtained by him as the result ofproceedings for liquidation by arrangementsubsequent to the accrual of the claim, the plaintiffsreplied that they had had no notice of theliquidation proceedings until long after they hadbeen concluded, and that the defendant had notinserted the names of the plaintiffs as his creditors,or their debt in any list, statement, or document,forming any part of the proceedings, and thatsubsequently to the close of the proceedings thedefendant had promised to pay the claim:--Held, a bad reply.STATEMENT of claim incorporated theparticulars set forth in the special indorsement onthe writ, which were in respect of work done by theplaintiffs for the defendant, in the year 1873.The 2nd paragraph of the statement of defencestated that proceedings for liquidation byarrangement under the Bankruptcy Act, 1869, hadbeen taken by the defendant, that a trustee had beenappointed in whom the estate and effects of thedefendant became vested, and that the discharge ofthe defendant had been *2 duly granted by a specialresolution of the creditors, and thereupon thedefendant obtained from the Court of Bankruptcyan order and certificate of discharge from all debtsand liabilities in the prescribed form; and thedefendant further said that the plaintiffs' cause ofaction, if any, occurred before the defendant's saiddischarge.Reply to the 2nd paragraph of the statement ofdefence, that the plaintiffs had no notice of theproceedings in bankruptcy or liquidation at anytime during the said proceedings, nor did theplaintiffs become aware of the same until long afterthe said proceedings were concluded, and that thedefendant did not insert the names of the plaintiffs,or either of them, as among his creditors, or thedebt, or any part thereof, sought to be recovered inthis action, in any list, statement, document, orpapers, forming part of the said proceedings, norgive, or cause to be given, any notice of anymeetings, as required by the said Bankruptcy Act,1869, and that since the close of the saidproceedings the defendant promised and agreed topay the full amount of the plaintiffs' claim.Demurrer to the reply and joinder.Ridley, for the defendant. The 127th section of theBankruptcy Act, 1869, makes the registration bythe registrar of the resolution of creditorsdischarging the debtor conclusive evidence that allthe requisitions of the Act in respect of suchresolution have been complied with. Consequentlythe fact that the plaintiffs had no notice of theliquidation proceedings, and that the debt was notinserted in the list, affords no ground of reply to thedefence. With regard to the subsequent promise topay the debt, the effect of the 49th section of theBankruptcy Act, 1869, is different from that of thesections of previous Acts in pari materiâ. The effectis not only to bar the remedy, but to destroy thedebt. Such debt cannot, therefore, afford a goodconsideration for the subsequent promise to pay.The ratio decidendi of the cases, in which it washeld that a debt barred by bankruptcy could berevived by a subsequent express promise, was thatthe remedy only was gone, but the debt continuedto exist, and so there was such a moral obligation topay it as would afford a sufficient consideration tosupport the express promise. [He cited 6 Geo. 4, c.16, s. 131; 5 & 6 Vict. c. 122, ss. 37, 43 *3 ; 12 &13 Vict. c. 106, ss. 200, 204; 24 & 25 Vict. c. 134,ss. 161, 164; Kirkpatrick v. Tattersall [FN1]; Jonesv. Phelps. [FN2]]FN1 13 M. & W. 766.FN2 20 W. R. 92.Willis, for the plaintiffs. It is submitted that thefailure to take any of the proper steps to give noticeof the liquidation proceedings to the plaintiffsprevents the discharge from affecting them. The127th section was not meant to cover such a defectas this. It was meant to cover irregularities ofprocedure, but not to cause creditors to be boundby proceedings to which they could not possibly beCopr. © West 2004 No Claim to Orig. Govt. Works

(1876-77) L.R. 2 C.P.D. 1 Page 21876 WL 18594 (CPD), (1876) 25 W.R. 253(Cite as: (1876-77) LR 2 C.P.D. 1)parties. It is admitted that prior to 6 Geo. 4, c. 16, adebt barred by bankruptcy might be revived by anexpress promise. That Act (section 131) providedexpressly that no such promise should be of anyavail unless in writing. The subsequent Acts haveall contained express provisions by which it wasenacted that such promises should not revive thedebt. The present Act is entirely silent with regardto the effect of such promises, and contains no suchprovisions as have been inserted in the previousActs. The only possible conclusion from this is thatthe legislature intended to revert to what was thewell-settled law long before 6 Geo. 4, c. 16. Nolegitimate inference to the contrary can be drawnfrom the trifling alteration of the language of the49th section from that used in the sections ofprevious Acts relating to the discharge of thebankrupt. It is incredible that the legislature, havingbefore them the series of particular sectionsexpressly relating to this subject in previous Acts,should, if they intended to re-enact the same law,have omitted any particular reference to the subject,and relied on such trifling alterations ofphraseology as the use of the word "release" in the49th section, instead of "discharge." In previousActs the terms "discharged" and "released" havebeen used indiscriminately, as meaning the samething with regard to bankrupts. Even if the debt isreleased, and so extinguished, it is contended thatthe substantial meaning of the decisions withregard to the revival of a debt by an expresspromise is that the fact of the debt having onceexisted, and never been paid, is a sufficient moralobligation to form a good consideration for apromise to pay it. The distinction for this purposebetween a debt which is extinguished and a debtthe remedy for *4 which merely is barred, is anarrow technicality, and is not the real ground ofthe decisions.[LORD COLERIDGE, C.J. Is not this, within theterms of s. 49, a proceeding "in respect of" the debtfrom which the debtor is discharged?]It is submitted not. The cause of action is not theold debt, but the breach of the new promise.Viewing the section in the light of the previoussections of a similar character, it cannot have beenintended that the words "in respect of" shouldintroduce any change of the law. They are onlyequivalent to "for." [He cited Flight v. Reed [FN3];Hawkes v. Saunders [FN4]: Trueman v. Fenton[FN5]; Rimini v. Van Praagh [FN6]; Wennall v.Adney. [FN7]]FN3 1 H. & C. 703; 32 L. J. (Ex.) 265.FN4 1 Cowp. 289.FN5 2 Cowp. 544.FN6 Law Rep. 8 Q. B. 1.FN7 3 B. & P. 247, 249.Ridley, in reply.LORD COLERIDGE, C.J.The reply raises two points. The first is, that theplaintiffs had no notice of the liquidationproceedings, and the debt was not inserted in thelist of creditors, and consequently that, as againstthe plaintiffs, the order of discharge has no effect.The answer suggested to this point is, that the127th section of the Bankruptcy Act, 1869,provides that the registration by the registrar of aspecial resolution of the creditors on the occasionof a liquidation by arrangement shall, in theabsence of fraud, be conclusive evidence that suchresolution was duly passed and all the requisitionsof the Act in respect of such resolution compliedwith. One of such requisitions is the production ofa list of creditors. Primâ facie, the words of thissection seem irresistible. Our attention, however,has been called by the plaintiffs' counsel to theprovisions of the 126th section of the Act, whichapplies to compositions. Among those provisionsthere is no doubt an express enactment that theprovisions of the composition shall only be bindingon the creditors whose names appear in thestatement of the debtor. But there are no suchwords in the section with regard to liquidation byarrangement. The probable reason for thisdifference has already been suggested. It may wellhave been that, when the legislature *5 was makingan enactment by which persons were to becompelled by the vote of a majority to accept ofless than they would otherwise have been entitledto, it was thought, in the case of an enactment sostringent, especial provision should be made forsecuring due notice to the persons so to be affected.Liquidation proceedings, on the other hand, aresubstantially similar to those in bankruptcy, and thecreditors under such proceedings get neither morenor less than creditors in bankruptcy.Consequently, it may well have been thought thatno other provisions were necessary in the case ofsuch proceedings for the protection of the creditors'rights than the ordinary provisions relating tobankruptcy. I am, therefore, of opinion that, in theCopr. © West 2004 No Claim to Orig. Govt. Works

(1876-77) L.R. 2 C.P.D. 1 Page 31876 WL 18594 (CPD), (1876) 25 W.R. 253(Cite as: (1876-77) LR 2 C.P.D. 1)absence of fraud, the 127th section prevents suchfacts as are stated in this reply from being anyanswer to the defence that the debtor has beendischarged under the proceedings for liquidation.The second point raised by the reply is, that therewas a subsequent promise to pay the debt. Ourdecision as to this must depend on the 49th sectionof the Bankruptcy Act, 1869. It is not denied thatthis was a debt from which, under that section, theorder of discharge released the bankrupt. Thequestion is, whether the subsequent promise couldrevive it. The argument of the plaintiffs' counselwas this. From Lord Mansfield's time down toBaron Parke's it was held that where there was alegal right the remedy for which was barred,though the right continued to exist, as in the case ofdebts the remedy for which was barred bybankruptcy or the Statute of Limitations, the moralobligation arising from such existing right formed asufficient consideration to support a promise, andso the debt might be revived by a subsequentpromise of the debtor to pay it. I do not stay toexamine the reasoning upon which such decisionswere based, it is sufficient that they exist, and Ihave no wish to cast any doubt on them. It is saidthat this being the state of the law prior to 6 Geo. 4,c. 16, express provision has been made with regardto this kind of debt in all the enactments since thenuntil the Act of 1869. In the Act 6 Geo. 4, c. 16, s.131, it was provided that no such promise shouldbe of any avail to revive the debt, unless it was inwriting. In subsequent statutes there have beenprovisions that even a promise in writing should beinsufficient to revive *6 the debt. That state ofthings continued up to 32 & 33 Vict. c. 71, thepresent Act. At the time when that Act was passed,the former Acts with regard to bankruptcy wererepealed by another Act, viz., 32 & 33 Vict. c. 83,which was passed on the same day. The 49thsection of the Bankruptcy Act, 1869, provides thatthe order of discharge shall release the bankruptfrom all debts provable under the bankruptcy, withcertain exceptions, and "in any proceedings thatmay be instituted against a bankrupt who hasobtained an order of discharge in respect of anydebt from which he is released by such order, thebankrupt may plead that the cause of actionoccurred before his discharge, and may give thisact and the special matter in evidence."There is, however, no provision in the Act similarto those contained in the former Acts with respectto the revival of debts barred by bankruptcy. Theargument is, that because the Act is silent on thismatter, therefore the debtor is remitted to theposition in which he stood before 6 Geo. 4, c. 16,and the whole policy of the bankruptcy law sincethat Act has been absolutely reversed. That wouldbe a startling conclusion. It must be observed,however, that the words of the present Act withregard to the effect of the order of discharge are notsimilar to those of the prior Acts.The words of the 126th section of 6 Geo. 4, c. 16,are that "any bankrupt who shall, after hiscertificate shall have been allowed, be arrested orhave any action brought against him for any debt,claim, or demand hereby made provable under thecommission against such bankrupt, shall bedischarged on common bail and may plead ingeneral that the cause of action occurred before hebecame bankrupt and may give this Act and thespecial matter in evidence." I will not go throughthe corresponding sections of the subsequent Acts,because the language, though not identical, issubstantially similar. The effect of them is, thatwhere an action is brought for a debt provableunder the bankruptcy, the defendant may plead thatthe cause of action accrued before bankruptcy.These are not the terms of the 49th section. Thewords of that section are "any proceedings inrespect of any debt from which he is released bysuch order." The plaintiffs' counsel was driven tosay that this was not only not an action *7 broughtfor the old debt, but not a proceeding in respect ofthe old debt. But the claim is in respect of work andlabour done in 1873, before the bankruptcyproceedings. The defence is to that claim, and thereply is to that defence. It is in vain to say that thisis not a proceeding in respect of a debt provableunder the liquidation, and which was discharged bythe order of discharge.The matter is somewhat bare of authority. But wehave been referred to a judgment of Bacon, V.C.,than whom there is no greater living authority onthe subject of bankruptcy, in the case of Jones v.Phelps. [FN8] It is true that the case differedsomewhat from this, inasmuch as it turned on thequestion whether the law previous to the presentAct was applicable or the present law, but the Vice-Chancellor seems to have decided on the widerground that, under the Act of 1869, a promise topay a debt barred by bankruptcy was nudumpactum, as there was no consideration for it. Suchauthority, therefore, as there is is in favour of theview we take.FN8 20 W. R. 92.The present Act in its general scope wasobviously intended to make bankruptcyproceedings more completely effect the object ofwinding up a man's previous liabilities and givinghim an altogether fresh start. I am not prepared toCopr. © West 2004 No Claim to Orig. Govt. Works

(1876-77) L.R. 2 C.P.D. 1 Page 41876 WL 18594 (CPD), (1876) 25 W.R. 253(Cite as: (1876-77) LR 2 C.P.D. 1)hold that, as it were by a side wind, and by reasonof the omission of particular provisions with regardto the effect of such promises as these, the Act hasreversed the whole course of legislative policy onthis subject since 6 Geo. 4, c. 16. It thereforeappears to me, both on the reason of the thing andsuch authority as there is, the reply is bad and ourjudgment must be for the defendant.LINDLEY, J.I am of the same opinion. With regard to the firstpoint, primâ facie it might not be unreasonable tosuppose that where a creditor was omitted from thelist of creditors and had no notice of the liquidationproceedings, he might be exempted from the effectof them, but when we look further and see that theeffect of the order of discharge in liquidationproceedings is the same as that of the order ofdischarge in bankruptcy, and that in bankruptcy acreditor may be bound though his name is omittedfrom the list, it is impossible not to hold that thecertifi cate of *8 discharge is as conclusive in thecase of proceedings by liquidation as in the case ofbankruptcy.With regard to the second point, our decision onthat must depend on s. 49. The plaintiffs' counselargued that on general principles of law apart fromstatutory provisions a promise to pay a debt, theremedy for which had become barred, wassupported by such antecedent debt, which formed asufficient consideration. I do not dispute thatproposition, though I confess I cannot quite followthe reasoning on which it is based. It may beadmitted that in general where the remedy only isbarred, the debtor may revive the debt by anexpress promise. But we have to look to theparticular enactments of the Bankruptcy Act to seehow far this doctrine applies in the case ofbankruptcy. The plaintiffs' counsel argues that theeffect of the omission in the present Act of thespecial provisions with regard to promises to paydebts barred by bankruptcy that were contained informer Acts, is that the general proposition abovereferred to applies, and the law is altered in theplaintiffs' favour. To that argument I cannot accede.The provisions of the present Act by which manyliabilities are made provable under the bankruptcywhich formerly were not provable, shew that theintention is that the bankrupt shall be morecompletely discharged from his liabilities thanunder previous Acts. It seems to me that, regardbeing paid to the obvious intention of the Act inthis respect, it could not have been intended so toalter the law that a subsequent promise shouldrevive the bankrupt's antecedent debts. The generalpolicy of the present law is much more stronglyagainst such a revival of liability than in previousActs. The section of the Act that relates to thedischarge of the bankrupt is the 49th. I agree withwhat my Lord has said with regard to the languageof that section. It seems to me impossible to saythat the present action is not a proceeding "inrespect of" a debt from which the defendant wasreleased by the order of discharge. The plaintiffs'counsel contends that the defendant cannot plead inthe language of the section that the cause of actionoccurred before his discharge, because the cause ofaction here is the breach of the subsequent promiseto pay. This is no doubt a plausible way of puttingthe case, but whether it is correct depends on themeaning of the term "cause of action." The only *9cause of action mentioned in the writ of summonsand the claim is clearly the old debt which accruedbefore the bankruptcy proceedings. This perhaps isa technicality, and might be met by an amendment,but I am of opinion that no amendment wouldmake the case any better for the plaintiffs. It seemsto me that the sense in which the term "cause ofaction" is used in the statute must include caseswhere so much of the cause of action as constitutesthe consideration for the promise has occurredbefore the discharge. There does not seem to be anydecision expressly in point on the facts of thepresent case, but in the case of Jones v. Phelps[FN9] Bacon, V.C., appears to have considered thisquestion and to have taken the same view as wenow take. For these reasons I think our judgmentmust be for the defendant.FN9 20 W. R. 92.RepresentationSolicitors for plaintiffs: Heather & Son.Solicitors for defendant: Worthington, Evans, &Cook.Judgment for the defendant.(c) Incorporated Council of Law Reporting ForEngland & WalesEND OF DOCUMENTCopr. © West 2004 No Claim to Orig. Govt. Works